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The quiet liberal plan for entitlement reform

Even if the Democrats accept chained CPI, they’re going to want some goodies in return. One big one: Let the highest earners pay more Social Security payroll taxes.

Right now, employers and workers only pay those payroll taxes on the first $113,700 of income.

Lift the cap so 90 percent of all Americans’ earnings are taxed — it’s only about 83 percent now — and a Social Security deal could raise about $550 billion in revenues over the next 10 years, according to estimates by Third Way, which has endorsed the approach. It would also wipe out Social Security’s deficit through 2020.

The Center for American Progress suggests getting rid of the earnings limit only for employers, but not for employees, so workers wouldn’t see a direct tax increase.

Either way, of course, this idea wouldn’t be a concession to Republicans at all — in fact, it would be a wildly tough sell. Any way it’s designed, it would look like a tax increase.

Blowback

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The idea is to change the way the government figures out how much more seniors should get in Social Security benefits each year to account for changes in their cost of living.

This new formula — a tweak to the consumer price index — would assume that people switch their buying habits when prices rise, rather than just buying the same things over and over. So, for example, if the price of ground beef goes up, someone might buy chicken or fish instead.

And when the price of chicken goes up, they’ll buy cat food.

In other words, benefits are capped. But Alpo and Friskies are still a bargain.

1. Make participation in Social Security optional. This is among other things a moral issue. Why should any American be forced to participate in any government program? Are we not free citizens? Is our income not our property? Are we not largely adults responsible enough to plan for our own retirements? Participation in Social Security is government coercion.

2. Those that opt out will have to forgo all previous contributions. This will keep many, if not most, middle-age workers in the system. It will depend on their doing the analyses to determine what would be best for them financially. This also eliminates those that opt out as future liabilities. This is also a sop to the Left and those concerned about paying back previous contributions.

3. Require employers to continue funding their portion of the FICA tax until all participants have passed away. Yes, we all know that the employer contribution is really an employee’s salary that he is never paid but this provision should garner some Democrat support due to the continuing program funding.

4. Ideally we’d also raise the retirement age and in a bow to fiscal reality, implement a means test so younger workers aren’t subsidizing grandma and grandpa’s vacations to Maui.

I wouldn’t exactly call this quiet, as Democrats have been trying to turn S.S. from a nominal retirement insurance plan into another wealth redistribution scheme for decades. The savings produced will undoubtedly be used for more vote buying expansions of the welfare state, which will accelerate the death spiral and make the inevitable crash even more painful.